A firm is trying to decide whether to keep an item of construction equipment another year. The firm is using the double declining balance (DDB) method for book purposes, and this is the fourth year of ownership of the equipment. The item cost P1,500,000 when it was new. Assume that the depreciable life of the equipment is eight years, with zero salvage value. Note: Double Declining Balance = 200% Declining Balance How much is the depreciation for year 3?
Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
A firm is trying to decide whether to keep an item of construction equipment another year. The firm is using the double declining balance (DDB) method for book purposes, and this is the fourth year of ownership of the equipment. The item cost P1,500,000 when it was new. Assume that the
Note: Double Declining Balance = 200% Declining Balance
How much is the depreciation for year 3?
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